States Inaugurate a Flat Tax Revolution NOTE: Since initial publication on February 1, this resource has been updated to reflect significant policy developments in the following states: Alabama Kentucky Oklahoma Alaska Maine Rhode Island Arizona Maryland South Carolina California Massachusetts South Dakota Colorado Michigan Utah Connecticut Minnesota Tennessee Florida Mississippi Vermont Georgia Missouri Virginia Iowa Nebraska West Virginia Idaho New Hampshire Indiana New Jersey Kansas New Mexico If 2021 was a big year for state tax reform and relief, 2022 may give it a run for its money. Among the 46 states holding legislative sessions this year, there has been a flurry of activity on taxes, with arrows almost invariably pointing toward tax reform and relief. With 7,383 state legislators and about 100,000 bills introduced each year, it’s possible to find introduced legislation doing almost anything, and sometimes in the early stages of session, it can be difficult to determine which proposals should be taken seriously and which will fall by the wayside. But now that nearly three months have passed, several major tax changes have already been enacted, while others are moving rapidly through legislative bodies, and others have died for the year. As we head into April, we have compiled a list of major state tax changes that have been enacted, legislation that is still advancing, and recent proposals that are worth keeping an eye on. No such list could possibly be exhaustive—any given state likely has more introduced bills on tax-related subjects than are covered in this entire review—but here’s what we’re following as we head into April. Income tax rate reductions remain a popular trend this year. So far in 2022, individual income tax rate reductions have been enacted in Idaho, Indiana, Iowa, and Utah, and a bill to flatten and reduce Mississippi’s individual income tax is awaiting the governor’s signature. Serious proposals to reduce individual income tax rates are still being considered in Colorado (ballot measure), Missouri, Nebraska, New York (lower rates only), Oklahoma, and South Carolina. Additionally, corporate income tax rate reductions have been enacted this year in Idaho, Iowa, and Utah, and are still being considered in Colorado (ballot measure), Missouri, and Pennsylvania. Meanwhile, one state—New Mexico—has enacted a permanent sales tax rate reduction. Several other states are considering proposals to permanently reduce (Kansas) or temporarily suspend (Illinois, Oklahoma, and Tennessee) the sales taxes on groceries. Proposals to permanently remove groceries from the sales tax base have lost momentum in several states, but the possibility remains on the table in Virginia. Many other states have enacted or are considering various temporary tax relief measures. Connecticut, Georgia, and Maryland have enacted gas tax suspensions, and legislation awaits the governor’s signature to do the same in Florida. Other states appear poised to follow, although one such proposal was rejected in Massachusetts. Similarly, a new sales tax holiday has been enacted in Connecticut, and two new sales tax holidays await the governor’s signature in Florida. Income tax rebates, a comparatively more efficient temporary tax relief approach (though still of mixed benefit in an inflationary period), have been enacted in Georgia and Idaho and are being considered in multiple states. Thus far, meaningful efforts to raise taxes—excluding proposals for net tax cuts which have partially offsetting rate increases elsewhere—have been proposed in only two states, Hawaii and Massachusetts. Given robust revenue growth (state tax collections rose 21 percent last year) and projections of significantly higher revenue for the foreseeable future, most states are exploring ways to return some of their increased revenue to the taxpayers. Launch 2022 State Tax Resource Center